Saturday, February 27, 2016

The G20 Finance calls to use “all tools” to support the economy – the Point

The central bankers of the G20 called on Saturday, following a two-day meeting in Shanghai, to use “all tools” to support the economy, facing a global recovery “uneven” and threatened by many risks, including Brexit.

the statement issued by the finance ministers of the richest countries in the world mentions among these risks, “the shock of a possible exit from the United Kingdom the European Union “.

this statement, which is made from the first paragraph of the text stresses the importance for the G20 to this issue which will be decided in a referendum on June 23

“the risks and vulnerabilities have increased,” the central bankers declare, referring further Brexit, “the volatility of capital flows, falling commodity prices, heightened geopolitical tensions and the influx of migrants in some regions “.

” There are growing concerns “about the economic outlook, although recent market turmoil” does not reflect the fundamentals of the world economy. “

“We must do more to achieve our common goals” of growth “strong and durable”, the ministers go. “We will use all the tools – monetary, budgetary and structural – individually and collectively” to “safeguard and strengthen the recovery.”

The text particularly stresses the need for major central banks to continue their already ultra-accommodative policies.

“Monetary policy will continue to support activity and ensure stability price “, but they alone can” lead to sustainable growth, “it is written.

Meanwhile, fiscal policy, which is for states to inflate their public spending to reinforce the activity, should be implemented “flexibly”.

Finally, “we reaffirm the role of structural macroeconomic policies to support our efforts,” it added.

the G20 puts also cautioned against “excessive volatility and disorderly movements in exchange rates,” but it does not explicitly target China’s interventions on the yuan, subject to violent depreciation last summer then again early 2016, which had raised fears of a “currency war”.

the statement nevertheless called great powers “to consult closely” on the state of the currency markets, theater sharp fluctuations, and reiterates its call to avoid “competitive devaluations”.

– Differences –

The G20 Finance had opened Friday on clear differences between Member States after a violent charge of the German Finance Minister Wolfgang Schäuble against stimulus policies .

the fiscal stimulus “have lost their effectiveness” and the ultra-accommodative monetary policies “could become counterproductive” in view of their potential adverse effects, ‘he stressed.

Conversely, several members of the G20, the United States and European Union (EU) in the lead, had raised their voices in defense of further monetary easing and demand that States having the opportunity to spend more to support the economy world.

“central bankers have indicated (in Shanghai) that they were ready to do more? s need be”, even if monetary policy “can not solve everything,” confirmed Saturday AFP the french Finance Minister Michel Sapin.

of course, “no one asks a coordinated fiscal stimulus globally, contrary to what has been decided in 2009″ in full financial crisis, said Mr. Sapin. However, “we request that countries in a better position” take the opportunity to act more vigorously, he stressed.

Washington lobbied for months for States that have surplus use to support demand, thinly veiled reference to Germany.

There may be “historical and cultural reluctance” of some countries to pass up public spending, acknowledged Michel Sapin, in a clear evocation of fiscal orthodoxy of Berlin.

But “we are in a situation that requires the use of all the man of margins? piece when they exist,” he said.